Blockchain for industry 4.0 HMI 2018

1. ©Mark Mueller-Eberstein & Adgetec Corporation Mark Mueller-Eberstein • Connecting business leaders and the IT for 2 decades. Investor, keynote speaker, best-selling author in 12 languages, Digital Transformation leader for Blockchain, Crypto currencies, IoT, AI and cloud computing. Former leadership positions in HP and Microsoft. • Mark Mueller-Eberstein is one of the world’s leading experts on how businesses can leverage key technology trends, transform organizations and to drive a competitive advantage. He is focusing for many years deeply on the potential of Blockchain including and beyond crypto currency technologies as investment and economic structure transformer and lead the discussions e.g. at #FIF2017 with CEOs of the largest financial institutions. Mark is an internationally renowned business leader, entrepreneur, investor, best-selling author, and shares his insights frequently through executive level engagements as well as broad global events like TEDx, Inbound, Rutgers’ Business School and even Coursera.org (Business Leadership courses for Blockchain, AI, VR/AR, IoT, Digital Transformation). Mark deeply appreciates working with international organizations like the Shenzhen (China) based Qianhai Institute for Innovation Research (QIIR) and APEC (Peru 2016 summit) and is a member of the “Washington State IoT and the Blockchain Council” advising the Governor and state legislators. • Mark is the founder of the Adgetec Corporation’s consulting business since 2010 and guiding many entrepreneurs in advisory positions and as their investor. 1

2. ©Mark Mueller-Eberstein & Adgetec Corporation Can blockchain technology be the answer to IoT and AI security for Industry 4.0? INDUSTRIAL SECURITY FORUM - THE SECURE PATH OF THE DIGITAL FUTURE Mark Mueller-Eberstein Rutgers University Founder and CEO of Adgetec Corporation @MarkMEberstein WeChat: MarkMEberstein

3. #INBOUND17 Who knows somebody who owns Bitcoin?

4. ©Mark Mueller-Eberstein & Adgetec Corporation POLL What do you KNOW about Blockchain Technology? a) Nothing. Are there LEGOs involved? b) I think it has something to do with Bitcoin c) My tech people want to talk with me about it d) We are fully implementing distributed ledgers and leveraging public blockchains e) “I am Satoshi Nakamoto” 4

5. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain technology… its about…. •TRUST •Data management and exchange 5

6. ©Mark Mueller-Eberstein & Adgetec Corporation IoT and AI combination for Consumers: Amazon Alexa 6

7. ©Mark Mueller-Eberstein & Adgetec Corporation Global center for AI is…. Seattle ? 7

8. ©Mark Mueller-Eberstein & Adgetec Corporation Seattle, Washington USA as AI development center? •Home of Microsoft and Amazon •Large development centers by Google, Facebook •University of Washington in top 15 research universities •Tsinghua University (from Beijing) opens Computer Science faculty •Alibaba and Baidu open cloud computing and AI research center 8

9. ©Mark Mueller-Eberstein & Adgetec Corporation And we have Blockchain tech, too: ➢Dragonchain (originally from Disney) ➢Rchain ➢Bitrex ➢Microsoft (Coco on Azure) ➢Amazon (on AWS) ➢Bloccelerate ➢…… and many more …. 9

10. ©Mark Mueller-Eberstein & Adgetec Corporation 10 "Internet of Things“ (IoT) – the foundation for Industry 4.0 is growing exponentially … and everybody tries to play….

11. ©Mark Mueller-Eberstein & Adgetec Corporation IoT: Connecting People, Communities and Things Many Things Many People with Many devices Lots of Data Lots of Cloud Services ??? Lots of Insights ??? IoT: Lots of players, technologies, services

12. ©Mark Mueller-Eberstein & Adgetec Corporation Modern Day Gold Rush: IoT, IIoT and Industry 4.0 • 55% say IoT is strategic to their business as a means to compete more effectively. 21% regard it as “transformative”—they know it holds promise and are looking for the right investment, says IDC*  The survey was conducted in July and August 2016, with 4,500 decision-makers from more than 25 countries participating, from enterprises with more than 100 employees in a wide range of industries. • IoT devices in 2016: between Gartner’s estimate of 6.4 billion (which doesn’t include smartphones, tablets, and computers) and International Data Corporation’s estimate of 9 billion.** • IoT is moving beyond pre-defined workflows, control scripts, and operating procedures • * Forbes, 2016 • ** IEEE, 2016

13. ©Mark Mueller-Eberstein & Adgetec Corporation Growth of IoT • Analysts are predicting for the IoT market:  IHS forecasts: IoT market will grow from an installed base of 15.4 billion devices in 2015 to 30.7 billion devices in 2020 and 75.4 billion in 2025  Gartner, Inc. forecasts that 8.4 billion connected things will be in use worldwide in 2017, up 31 percent from 2016, and will reach 20.4 billion by 2020. Total spending on endpoints and services will reach almost $2 trillion in 2017. 13

14. ©Mark Mueller-Eberstein & Adgetec Corporation IoT spending: it is the IIoT first investments and patterns per industry and cross-industry In IDC’s IoT spending forecasts, released on January 4th 2017, the research firms also has data on the top three industries in IoT spending for the past year: 1. IoT spending in manufacturing accounted for $178 billion in 2016. 2. IoT spending in transportation ranked second in 2016 with $78 billion. 3. IoT spending in utilities ranked third in 2016, accounting for $69 billion. • Consumer IoT spend: on the fourth spot 14

15. ©Mark Mueller-Eberstein & Adgetec Corporation • The internet of things is like the mobile computing and communication revolution also accelerating some of the other technologies • The rapid IoT adoption by businesses and consumers is generating data, that allow Big Data and Artificial intelligence applications to generate new insights. • Managing and securing IoT devices and their generated data is a challenge that Blockchain Technology might be a good answer for. 15

16. ©Mark Mueller-Eberstein & Adgetec Corporation IoT and big data • The term “Big Data” is an understatement for the amount of data IoT devices will produce. • According to the Ericsson Mobility Report, IoT devices and sensors will exceed mobile phones as the largest category of connected devices in 2018 and generate a staggering 400 zettabytes of data per year. 16

17. ©Mark Mueller-Eberstein & Adgetec Corporation IoT and Artificial Intelligence • With IoT: AI can help companies take the billions of data points they have and boil them down to what’s really meaningful. • Review and analyzes the data: find patterns or similarities that can be learned from so that better decisions can be made. • Machine-learning cloud services and Artificial Intelligence will be put to use to mine the data that would be coming in from IoT devices.

18. ©Mark Mueller-Eberstein & Adgetec Corporation Combining AI with other key technologies like IoT and Blockchain is especially powerful 18

19. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain benefits: Blockchain are designed to move data from a to b in a very secure way Logistics: • optimizing data exchange between different data silos Digital supply chain: dev ops: shorter time, higher quality, increased productivity • Financial recording: audits by pushing button vs bringing in auditors 19

20. ©Mark Mueller-Eberstein & Adgetec Corporation IoT and Blockchain Will Converge • Blockchain is more than a concept now and has applications in many verticals besides FinTech including IoT. • Blockchain technology is considered by many experts as the missing link to settle scalability, privacy, and reliability concerns in the Internet of Things. • Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices; allow for significant savings to IoT industry manufacturers. • This decentralized approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. • The cryptographic algorithms used by Blockchain would make consumer data more private. • IoT will converge with Blockchain for better security and privacy opening the door for a new category in applications, hardware, and talents. 20

21. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain for good • Increase efficiency • Lower cost • Compliance • Less graft • Increased scrutiny of supply chain • Digital identities (employees, refugees,... devices ) 21

22. ©Mark Mueller-Eberstein & Adgetec Corporation Lets look at a few scenarios 22

23. ©Mark Mueller-Eberstein & Adgetec Corporation • Supply chain project for lumber chain from forest over manufacturer to shop in NYC Insurance for flight delays (pays out automatically when delay happens) • Blockchain audit trail for auctioning of by public governments “sweep the shadows of mistrust from the corridors of government” • Land registry: republic of Georgia ; property gets its own hash; business process down to 10 minutes from 3 days • Coca Cola: protect workers in supply chain; collaboration with US government; no change of labor or contracts 23

24. ©Mark Mueller-Eberstein & Adgetec Corporation Global organization with lots of different business units, secure IoT and logistics needs

25. ©Mark Mueller-Eberstein & Adgetec Corporation Even Disney does (their own, open source) Blockchain

26. ©Mark Mueller-Eberstein & Adgetec Corporation Walmart Food Safety Collaboration Center • The Walmart Food Safety Collaboration Center in Beijing, China launched in 2016. • Five-year, $30 million project that seeks to improve the overall food supply chain through innovation, collaboration, and education. • As part of this effort, the Walmart Foundation is funding a $4.5 million project led by the Massachusetts Institutes of Technology to deploy advanced predictive analytics and machine learning to mitigate the risk of food adulteration and fraud in China. • With blockchain, food products can be digitally tracked from an ecosystem of suppliers to store shelves and ultimately to consumers. • Blockchain technology has the potential to provide this level of traceability as part of a digitized food system. It can also take us beyond traceability to transparency, where we have a complete and interconnected view of the supply chain. • Combining this “Big Data” with AI: “Will lead to new insights that can further improve supply chain efficiencies, promote sustainability, and reduce food waste.” 26

27. ©Mark Mueller-Eberstein & Adgetec Corporation According to Gartner, a quarter of enterprise data hacks will involve IoT. 27

28. ©Mark Mueller-Eberstein & Adgetec Corporation Robbing a casino through the Aquarium? • Nicole Eagan, the CEO of cybersecurity company Darktrace: “cybercriminals hacked an unnamed casino through its Internet-connected thermometer in an aquarium in the lobby of the casino” Hackers exploited a vulnerability in the thermostat to get a foothold in the network. They managed to access the high-roller database of gamblers and "then pulled it back across the network, out the thermostat, and up to the cloud.“ • “undisclosed damages” 28

29. Blockchain Technology The Next Radical Internet Transformation: How Blockchain Technology is transforming Business, Governments, Computing and Security models

30. ©Mark Mueller-Eberstein & Adgetec Corporation In the early 1990s… We were discussing if the internet will impact mail service organizations Nobody thought about shopping, entertainment or finance

31. ©Mark Mueller-Eberstein & Adgetec Corporation Never seen anything developing this fast across so many scenarios. • I do this with dozens of people for 4+ years DEEPLY and learn much (surprisingly new stuff) every day • Much of what is published every day is factually wrong and / or outdated 31

32. ©Mark Mueller-Eberstein & Adgetec Corporation Foundations • Blockchain is a software technology • There is not one single blockchain • Usage scenarios of Blockchain technology my look very different from each other • Blockchain technology is not Bitcoin (but it was invented for the “Bitcoin token”) • Blockchain Technology is NOT limited to financial transactions. • Almost anything can be “tokenized” 32

33. ©Mark Mueller-Eberstein & Adgetec Corporation What does a blockchain do….?

34. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain Technology Solves the problem of transfer of value between internet users without having to rely on a third party.

35. ©Mark Mueller-Eberstein & Adgetec Corporation Changing value transfer over the internet Conventional Transaction: A central intermediary (usually a bank or PayPal) verifies and validates the transaction (and manages the ledger / database) 35 Blockchain Transaction: The blockchain network and the cryptographic technologies verify and validate the transaction. No central intermediary is required. The blockchain (and the network’s “value”!) resides with the market participants.

36. ©Mark Mueller-Eberstein & Adgetec Corporation The “technical stuff”…

37. ©Mark Mueller-Eberstein & Adgetec Corporation Networking…. Old school computing and business Changed computing and business over the last 20 years Mark Mueller-Eberstein & Adgetec Corporation

38. ©Mark Mueller-Eberstein & Adgetec Corporation Central Control = Central Point of Failure Mark Mueller-Eberstein & Adgetec Corporation Resilience and independence with distributed ledgers and systems

39. ©Mark Mueller-Eberstein & Adgetec Corporation Central Control = Central Point of Failure Mark Mueller-Eberstein & Adgetec Corporation • Blockchain Technologies use a “Peer-to-Peer (P2P) network” • Each party to the network represents a “node” and all nodes communicate with each other. • Usually: The larger the network and the more nodes within the network, the more stable and secure • The P2P network can be public (open) or private (closed) • Identity of parties can be protected • Transactions can be visible / transparent

40. ©Mark Mueller-Eberstein & Adgetec Corporation Benefits of Blockchain secured distributed leger vs. central ledger • Information can be put on block chain and can never be changed • Full transparency for every transaction • "Record every information forever“ ➢ Worldwide ledger: IP, land titles, art,... Mark Mueller-Eberstein & Adgetec Corporation

41. ©Mark Mueller-Eberstein & Adgetec Corporation Why does this matter? 1. Eliminates the need for third party moderator / intermediary 2. Creates on (very secure) Golden Record 3. Can eliminate back office and intermediary functions 4. Can be paired with other smart technologies (think IoT, AI, SCM, ERP,…) to enable coordinated record keeping that would otherwise be logistically difficult or impossible. 42

42. ©Mark Mueller-Eberstein & Adgetec Corporation Tokens or Coins • Tokens or coins are digital assets intended to convey value akin to offline currency, and can represent anything from loyalty points to vouchers and IOUs to actual objects in the physical world such as a deed or title. • A token or a coin is a digital representation of a right to participate in a network. It cannot be duplicated, forged, or created out of thin air by a central authority because it’s running on a blockchain and its rules are backed by immutable code. • A Bitcoin, for example, represents your right to access and participate in the Bitcoin network protocol.

43. ©Mark Mueller-Eberstein & Adgetec Corporation Three Types of Coins Ideas Paradigm Other Examples “Coins” 1. Currencies Bitcoin (BTC) LiteCoin (LTC), DASH, Bitcoin Cash (BCH), RaiBlocks (XRB), Monero, Zcash,….. 2. Platforms Ethereum (ETH) NEO, Cardano (ADA), Dragonchain (DRGN),… 3. Tokens Ripple (XRP) Sia Coin (SC), OmiseGo (OMG), Golem (GNT), IOTA (MIOTA) “Cryptosecurities” 4. Securities BitDice (CSNO) …

44. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain Technology: Peer-to-peer network, secured by cryptography and e.g. proof-of-work or proof-of-stake Mark Mueller-Eberstein & Adgetec Corporation Blockchains: Public / Open “Private” Government Some Blockchains: Some Crypto Currencies:

45. ©Mark Mueller-Eberstein & Adgetec Corporation Blockchain Tech beyond currency and financial industry… … Think any kind of transaction and related services… Mark Mueller-Eberstein & Adgetec Corporation

46. … for example…. • Records of estates (e.g. Georgia land registry) • Records of shares • Identification • Authentication • Any financial transaction • Voting • Domain control (DNS) • Central Trust (“Escrow”) for any kind of deals • Messaging (“signed and unchangeable”) • IP management • Used as Donation platform • • CONSIDER: Transparency not always good! • E.g. donations for LGBT organizations visible to government of Uganda... • … Mark Mueller-Eberstein & Adgetec Corporation

47. ©Mark Mueller-Eberstein & Adgetec Corporation Billions have no…. - Birth records - Identification documents - Land and other property titles - Professional references -….. 48

48. ©Mark Mueller-Eberstein & Adgetec Corporation Identification for everybody • Technologies from leveraging the phone SIM to biometric can help creating economic access for people outside the Western world. • Companies like lifeID do offer KYC compliant blockchain based solutions, where every human can create an identity, which would allow them to transact with anyone else in the world using the internet. • With secure identities, individuals now can bank or participate in commerce with institutions they would otherwise not have access to. • And again.. It is about so much more than just banking... “Identity” allows to claim property, authenticate.... 49

49. ©Mark Mueller-Eberstein & Adgetec Corporation The next level of blockchain technology enabled innovations are a mix of economics, social organization and software development. The emergence of “economic design patterns”: We see key economic constructs that appear in decentralized applications, similar to software design patterns ➢Electricity = energy over the wire. ➢Telephone = communication over the wire. ➢Blockchain = consensus over the wire. 50

50. ©Mark Mueller-Eberstein & Adgetec Corporation Smart contracts and Ethereum • When discussing Blockchain technology, now often the term “Smart Contracts” is used. • Smartcontracts are programs for business logic (more than just contracts) • Today these are often Very simple automated transactions. (Think vending machine as “Smart contract example”. • User select product, transfers value (aka inserts cash) • But the potential is nearly endless.

51. ©Mark Mueller-Eberstein & Adgetec Corporation Where Blockchain technology is uniquely positioned to enabled innovations: • Platforms like Ethereum: We start to see synergies between decentralized applications Contracts calling other contracts ~= copy/paste, imbedding and inter-/hyper linking (OLE). • Ethereum (and maybe NEO or Dragonchain)= an operating system for consensus and social organization. • The forgotten killer application of crypto currencies - confiscation resistance (if handled correctly). Goes hand in hand with inflation resistance. • Blockchain technology allows Trust in a trustless environment. With Zero knowledge proofs and then ZK-snarks and their applications we can create even further business and transaction scenarios. 52

52. ©Mark Mueller-Eberstein & Adgetec Corporation Some things never change…. When there is money… some people try to steal it…

55. ©Mark Mueller-Eberstein & Adgetec Corporation Security starts at data collection and needs to be managed end to end 56

57. ©Mark Mueller-Eberstein & Adgetec Corporation Solutions needed WHY? Know-How (people, process, tech capabilities,..) WHAT? Technology SQL: 50% consulting ERP / CRM: 80% consulting “Internet” / Blockchain: 95% consulting Office Suite: 1% consulting

58. ©Mark Mueller-Eberstein & Adgetec Corporation Explain the benefits of tech for their business! Reject 90% of Blockchain proposals, because other tech works better 59

59. ©Mark Mueller-Eberstein & Adgetec Corporation Best practice for enterprises: • Partnerships are key to learn and implement quickly • Competition vs cooperation: no incentive to share tech and cost savings with “freeloaders” (especially in very competitive industries like shipping) • Publicly and broad alliances vs. private clubs/Consortium 60

60. ©Mark Mueller-Eberstein & Adgetec Corporation The Blockchain revolution is here.  Your Opportunity! ➢ Change will be fundamental on business, technology, processes, structures and people ➢ Technology & customer oriented leaders are positioned to drive and realize the vision and image of the future ➢ Personally, I believe bringing Billions into the economic system is an opportunity and our responsibility

61. ©Mark Mueller-Eberstein & Adgetec Corporation Adgetec: YOUR advantage is our mission “high value and impact consulting” 62

62. ©Mark Mueller-Eberstein & Adgetec Corporation THANK YOU!  MarkME@adgetec.com  Twitter: MarkMEberstein  US +1 855.423.4383 Mark Mueller-Eberstein Investor, CEO of Adgetec Corporation Bestselling Author WeChat: MarkMEberstein Mark Mueller-Eberstein & Adgetec Corporation

63. ©Mark Mueller-Eberstein & Adgetec Corporation “The first internet era was predicated on the availability of information and content anywhere in the world and at any time. Now the second era, fueled by blockchain technology, is ushering in what is known as the Internet of Value, featuring a revolutionary distributed platform poised to reshape and advance the global business environment and world order.” Don Tapscotts, 2017